Question

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Exercise 4-12 Equivalent Units; Assigning Costs; Cost Reconciliation-Weighted Average Method (L04-2, LO4-4, LO4-5) Superior Micro Products uses the weighted average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,600 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $712,560 in total. The ending work in process inventory in January consisted of 3,400 units, which were 50% complete with respect to materials and 30% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows: Materials Labor Overhead $14.40 $ 3.80 $8.20 Cost per equivalent unit Required: 1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month. 2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January 3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January 4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Answer 1

1) Equivalent unit

	Material	Labor	Overhead
Equivalent unit of ending WIP	3400*50% = 1700	3400*30% = 1020	1020

2) Cost of ending work in process

	Material	Labor	Overhead	Total
Cost of ending work in process	1700*14.40 = 24480	1020*3.8 = 3876	1020*8.20 = 8364	36720

3) Cost of unit transferred out

	Material	Labor	Overhead	Total
Cost of Unit transferred out	25600*14.40 = 368640	25600*3.8 = 97280	25600*8.20 = 209920	675840

4) Cost reconciliation

Total cost to be accounted for	712560
Cost accounted as
Cost of unit transferred out	675840
Cost of ending WIP	36720
Total cost accounted for	712560